MGMT Chapter 11, MGMT Chapter 12

Which of the following best exemplifies the use of input controls? A. McDonald's use of standard operating procedures B. GM's use of the multidivisional strategy C. Zappos' use of monitoring-free customer service calls D. Southwest Airline's use of employee friendliness

A. McDonald's use of standard operating procedures

Which of the following is true of the process of organizing for competitive advantage? A. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. B. Strategy formulation and strategy implementation are independent activities. C. Organizing for competitive advantage is a static and not a dynamic process. D. Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage.

A. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.

McDonald's uses detailed standard operating procedures throughout the world to ensure product quality. This implies that McDonald's has a high degree of _____. A. formalization B. specialization C. decentralization D. hierarchy

A. formalization

Ethics is: A. not synonymous with law. B. impossible to codify into law. C. always universal and cannot differ between cultures. D. the minimum acceptable standard in business practice.

A. not synonymous with law.

Florian just graduated from law school and wants to start his own law firm. It is best for Florian to use a _____ organizational structure. A. functional B. simple C. mechanistic D. matrix

B. simple

An organization that is organized according to strategic business units (SBUs) and also along organizational structures is most likely using a _____ structure. A. functional B. multidivisional C. matrix D. simple

C. matrix

In which of the following ways does Zappos achieve organizational control? A. It continually changes the organizational values that guide its employees. B. It refrains from monitoring its employees' calls. C. It encourages employees to be creative and innovate and to go the extra mile to deliver a wonderful customer experience. D. It enforces that each group member's compensation depends in part on the group's overall productivity.

D. It enforces that each group member's compensation depends in part on the group's overall productivity.

Which of the following types of groups is most susceptible to groupthink? A. A diverse group B. A cohesive group C. A heterogeneous group D. A decentralized group

B. A cohesive group

Which of the following statements about an organization's culture is NOT true? A. A positive culture motivates employees by appealing to high ideals. B. A strong monitoring and supervision mechanism is needed to enforce the culture. C. A positive culture encourages employees to make decisions not only with their heads but also with their hearts. D. Employees feel that they are part of a larger community by internalizing the firm's values and norms.

B. A strong monitoring and supervision mechanism is needed to enforce the culture.

Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos. A. organizational structure B. organizational culture C. organizational strategy D. organizational controls

B. organizational culture

Why did W.L. Gore reorganize itself into a functional structure from a simple structure? A. A simple structure was too formalized, specialized, and centralized to really facilitate any kind of productivity. B. A functional structure is more decentralized. C. A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth. D. A functional structure has a tall hierarchical structure that relies on bottom-up communication.

C. A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.

Rast Inc. is an adhesive manufacturer. After a slight dip in production numbers, it forms a team to find a quick solution to this problem, at least for the shorter term. This scenario best exemplifies _____. A. exploration B. exploitation C. co-opetition D. competition

B. exploitation

An organization is characterized as having a flexible division of labor, distributed decision-making, and generalized knowledge of how to accomplish strategic goals valued. This organization is most likely _____ in nature. A. specialized B. organic C. mechanistic D. formalized

B. organic

Plow Inc. is a greeting card manufacturing company. Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors. In this scenario, Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n) _____. A. simple organization B. organic organization C. mechanistic organization D. integrated organization

B. organic organization

Since an organic structure helps a firm build core competencies in areas such as R&D and marketing, this structure is employed by firms that: A. have a tall hierarchical structure. B. pursue a differentiation strategy at the business level. C. have a high degree of specialization and centralization. D. focus on standardizing operating procedures.

B. pursue a differentiation strategy at the business level.

Why does a functional structure rely on a flat organizational structure? A. The work in the organization is centrally coordinated by the CEO. B. It allows for a higher degree of specialization and domain expertise. C. It allows for efficient bottom-up and top-down communication. D. It allows for the implementation of a differentiation strategy

C. It allows for efficient bottom-up and top-down communication.

Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage? A. W.L. Gore & Associates organizes its employees into project-based teams. B. Apple develops high-tech products that are preferred by consumers across the world. C. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time. D. GM offers compensation if its products do not meet a consumer's expectations.

C. Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time.

GE's board has only one inside director, Jeffrey Immelt, GE's CEO, who also acts as chairman of the board. This is known as duality. Which of the following statements represents the best argument for this duality in GE? A. The CEO is likely to be more responsible because he is setting his own performance targets. B. The CEO might be able to influence the board through setting the meeting agendas. C. The CEO possesses invaluable inside information that can help chair the board effectively. D. The CEO will suggest board appointees who are friendly toward him or her.

C. The CEO possesses invaluable inside information that can help chair the board effectively.

Which of the following perspectives best supports the Shared Value creation framework? A. Markets are more often than not defined by societal needs rather than economic needs. B. Failing to create value for society almost always reflects on the bottom line. C. A firm's competitive advantage depends on pitting economic and societal needs in a trade-off. D. Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.

D. Externalities such as pollution, wasted energy, and costly accidents actually create internal costs.

In public stock companies, which of the following expectations of principals is most likely to lead to principal-agent problems? A. The expectation that the agent will follow the country's laws and regulations B. The expectation that the agent will go above and beyond the call of duty C. The expectation that the agent will reconnect economic and social needs D. The expectation that the agent will act in the principal's best interest

D. The expectation that the agent will act in the principal's best interest

Roman owns shares in a company called Copnay Telecom Inc. The company's financial performance has been declining over the past few months, and the value of its stock has been decreasing. Roman wants to proactively cut his losses and therefore sells his shares. Jeremy, a trading enthusiast, buys shares in Copnay Telecom because he believes that the share prices cannot go anywhere but up. Which of the following characteristics of a public stock company does this scenario best exemplify? A. Separation of legal ownership and management control B. Legal personality C. Limited liability for investors D. Transferability of investor ownership

D. Transferability of investor ownership

Which of the following proves that GE's board of directors is significantly independent? A. 26 percent of the board members at GE are female. B. The CEO of GE is also the chairman of the board. C. 16 of the 17 board directors are from outside the organization. D. GE's board has five committees, each with its own chair.

C. 16 of the 17 board directors are from outside the organization.

Kolt Inc., a large and successful retail chain on the West Coast, decides to expand its operations across the U.S. Which of the following organizational structures should Kolt Inc. use? A. Basic B. Simple C. Multidivisional D. Functional

C. Multidivisional

What was Leo Apotheker's role in the downfall of HP's market value? A. Mr. Apotheker leaked sensitive internal information to an online magazine. B. Mr. Apotheker was involved in a sexual harassment lawsuit with Jodie Fisher, an independent contractor. C. Mr. Apotheker appointed Meg Whitman as the interim head of HP. D. Mr. Apotheker was instrumental in acquiring the overvalued British software company Autonomy.

D. Mr. Apotheker was instrumental in acquiring the overvalued British software company Autonomy.

W.L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has: A. a formalized structure. B. a decentralized structure. C. organizational inertia. D. a top-down management style.

B. a decentralized structure.

According to the perspective of shareholder capitalism, _____. A. shareholders in public stock companies are restricted from buying shares of two competing companies B. shareholders in public stock companies have the most legitimate claim on profits C. shareholders in public stock companies have significant decision-making power D. shareholders in public stock companies have unlimited financial liability

B. shareholders in public stock companies have the most legitimate claim on profits

A high degree of formalization in an organization is most likely to _____. A. improve customer service B. slow down decision-making C. produce inconsistent results D. increase creativity and innovation

B. slow down decision-making

Which of the following could most likely have prevented the accounting scandals of the early 2000s and the global financial crisis? A. Adopting a narrow shareholder perspective B. Separating economic interests and social needs C. Practicing effective corporate governance D. Adopting the principles of shareholder capitalism

C. Practicing effective corporate governance

Why must managers use a mechanistic structure to implement a cost-leadership strategy? A. A mechanistic structure offers a centralized structure with well-defined lines of authority. B. A mechanistic structure allows for a lower degree of specialization. C. A mechanistic structure offers continuous innovation and flexibility as well as creativity. D. A mechanistic structure allows for the CEO to delegate tasks.

A. A mechanistic structure offers a centralized structure with well-defined lines of authority.

Which of the following real-world scenarios best exemplifies information asymmetry in a public stock company? A. Based on a tipoff by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement. B. GE knew that it could create a profitable venture out of producing green products, so it rolled out the ecomagination strategy. C. Mark Hurd, CEO of HP, was unaware of the sexual harassment allegations, and the board's demand for him to resign caught him by surprise. D. Goldman Sachs was party to the Abacus deal despite knowing its shortcomings.

A. Based on a tipoff by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement.

Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization? A. It allows a high level of integration. B. It helps contain the core competencies within a strategic business unit (SBU). C. It leads to competition between SBUs. D. It helps evaluate each SBU as a standalone profit-and-loss center.

A. It allows a high level of integration.

Which of the following facts proves that GE's board is fairly diverse compared to other Fortune 500 companies? A. GE's board is composed of 94 percent outside directors, compared to less than 70 percent for the others. B. GE's board is chaired by its CEO while other companies have outside directors. C. GE's board is composed of 28 percent women, compared to less than 16 percent for the others. D. GE's board has five committees, each with its own chair, compared with less than three for the others.

C. GE's board is composed of 28 percent women, compared to less than 16 percent for the others.

What helps notions such as fairness, honesty, and reciprocity to be codified into law? A. The notions are synonymous with law. B. The notions differ to some degree in different cultures around the globe. C. The notions are universal norms. D. The notions are characteristics inherited by each person irrespective of the culture.

C. The notions are universal norms.

Outside directors are more likely to watch out for the interests of shareholders of their firm because: A. they are more likely to benefit from using inside information to trade stocks. B. they do not have the safety of serving on the boards of other firms. C. they are part-time employees of the firm. D. they have more independence than inside directors.

D. they have more independence than inside directors.

Poison pills have become rare because: A. leveraged buyouts can effectively skirt the measures put in place by poison pills. B. the market for corporate control is dead. C. federal laws prevent hostile takeovers. D. they retard an effective function of equity markets.

D. they retard an effective function of equity markets.

Why do shareholders of public companies need to appoint a board of directors to represent their interests? A. Because of the separation of ownership and control B. Because employees of a company cannot be shareholders C. Because the board of directors itself is made up of shareholders D. Because they want tighter control over day-to-day operations of a company

A. Because of the separation of ownership and control

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy? A. It allows a cost leader to upgrade core competencies in manufacturing and logistics. B. It enables a cost leader to build products that are different from its competitors' offerings. C. It enables a cost leader to increase costs above that of its competitors. D. It allows a cost leader to operate in a decentralized organizational structure.

A. It allows a cost leader to upgrade core competencies in manufacturing and logistics.

In a public stock company, senior executives, such as the CEO, face agency problems when: A. they delegate authority of strategic business units to general managers. B. they decide to get involved in the day-to-day operations of a company. C. the board of directors possesses more information about the company than they do. D. the firm designs work tasks, incentives, and employments that minimize opportunism.

A. they delegate authority of strategic business units to general managers.

What best describes transferability of investor ownership in a public stock company? A. Investors can give out company stocks as a gift. B. Investors are allowed to trade shares of stocks. C. Investors are allowed to participate in strategy formulation. D. Investors can be hired as employees.

B. Investors are allowed to trade shares of stocks.

Which of the following is true of a functional structure? A. It offers a lower degree of specialization than a simple structure. B. It relies on a relatively flat organizational structure. C. It offers decentralized management. D. It relies on bottom-up communication rather than top-down communication.

B. It relies on a relatively flat organizational structure.

Which of the following occurrences was NOT an event that facilitated HP's sordid "soap opera"? A. Patricia Dunn, then chairman of the board, launched a covert investigation where she conducted surveillance on HP's board members, selected employees, and some journalists. B. Mark Hurd, newly appointed CEO, oversaw large-scale layoffs and a pay cut for all remaining employees as he reorganized the company. C. Jodie Fisher, an independent contractor, worked as a hostess at HP-sponsored events and personally ensured that Mr. Hurd spent time with the most important clients. D. Leo Apotheker, who came to HP after being let go from SAP, proposed a new corporate strategy for HP.

B. Mark Hurd, newly appointed CEO, oversaw large-scale layoffs and a pay cut for all remaining employees as he reorganized the company.

Which of the following best defines duality in a board of directors? A. A person holds both the role of CEO and chairperson of the board. B. A person holds both the role of inside director and outside director of the board. C. A person holds both the role of director and shareholder of the company. D. A person holds the role of CEO on the boards of two companies.

A. A person holds both the role of CEO and chairperson of the board.

Rehman is a firm believer in Milton Friedman's view of a firm's social obligations. With which of the following statements is Rehman most likely to agree? A. Businesses can use their resources to create profit as long as they do so within the rules of the game. B. Firms should not go beyond their economic responsibility to increase profits. C. Firms should define value creation more narrowly in terms of financial performance. D. Businesses should engage in open and free competition without deception or fraud, only as long as their competitors do so.

A. Businesses can use their resources to create profit as long as they do so within the rules of the game.

Which of the following is true of business ethics? A. Certain notions such as fairness, honesty, and reciprocity are universal norms. B. Business ethics is an agreed-upon code of conduct in business, based on laws. C. The perception of what is ethical and what is not is similar across different cultures. D. Business ethics needs to be codified into law in order to be followed.

A. Certain notions such as fairness, honesty, and reciprocity are universal norms.

What most likely happens when a firm optimizes its organizational structure to its current situation? A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur. B. It achieves superior performance. C. It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution. D. It transforms strategy into actions and business models.

A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur.

Why is the optimal organizational structure a multidivisional structure? A. Its focus is on driving down costs. B. Its focus is on producing differentiated products. C. Its focus is on retaining activities within a single geographic area. D. Its focus is on establishing a flat hierarchy operated in a decentralized fashion.

A. Its focus is on driving down costs.

Cup N Cone Inc., a graphic design firm, has offices in New York, Texas, California, New Mexico, and New Jersey. Each of these offices is headed by a president who reports directly to Marvin Grey, the CEO. The heads of the centralized HR, Finance, and Marketing teams report to Marvin Grey as well. Managers in the various offices also report to the CEO directly. Based on this information, which of the following statements is most likely to be true? A. Marvin Grey has a wide span of control. B. Cup N Cone Inc. has a tall hierarchical structure. C. Marvin Grey is underworked. D. Cup N Cone Inc. is a mechanistic organization.

A. Marvin Grey has a wide span of control.

Opal, a recent fashion design school graduate, has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel. After experiencing some success with sales, she recruits two employees to handle customers at the store. However, she handles other day-to-day affairs herself, while continuing to design clothes. Which of the following is likely to be a pitfall of this organizational structure established by Opal? A. Once the firm starts growing and attracting more customers she is likely to feel overloaded. B. Hiring more employees will result in loss of intellectual property. C. People are highly unlikely to buy clothes from a store run by a fashion design student. D. The online admiration of her designs will not translate into sales.

A. Once the firm starts growing and attracting more customers she is likely to feel overloaded.

A bank, YPC, offers a customer a personal loan. In which of the following circumstances will this decision most likely be considered unethical? A. The bank knows that the customer will be unable to pay the loan if the interest rate rises. B. The bank is not aware of the investments made by the customer. C. The bank has the financial statements of the customer, but it is not aware of each source of income. D. The bank is depending on the customer to pay back the loan before term completion.

A. The bank knows that the customer will be unable to pay the loan if the interest rate rises.

Which of the following real-world events would act as the most likely deterrent against adopting a purely stakeholder strategy approach to business? A. The nonsustainable debt levels incurred by sovereign governments to fund social programs B. The financial crisis in Europe brought about by money lenders seeking to make quick money C. The collapse of the economy in the U.S. brought about by the housing crisis D. The rise of GDP in countries that do not believe in Milton Friedman's philosophy

A. The nonsustainable debt levels incurred by sovereign governments to fund social programs

Which of the following scenarios best exemplifies a leveraged buyout of a telecommunications firm, Telbok Inc.? A. The owner of another company buys all the outstanding shares of Telbok. B. A private equity firm, Rainbow Inc., buys a large amount of shares of Telbok. C. Telbok sells all its shares and declares bankruptcy. D. Telbok buys back a large amount of its own shares from the stock market.

A. The owner of another company buys all the outstanding shares of Telbok.

Which of the following is true of the codes of conduct of an organization? A. They detail how the organization expects an employee to behave and to represent the company in business dealings. B. They are a reiteration of the laws pertaining to business dealings in a corporate environment. C. They are a guide to determine what is lawful and what is unlawful. D. They help the board of directors and the CEO implement shareholder capitalism.

A. They detail how the organization expects an employee to behave and to represent the company in business dealings.

Which of the following is true of the board of directors in a public stock company? A. Votes at shareholder meetings determine whose representatives are appointed to the board of directors. B. Because shareholders generally have uniform interests, the composition of the board is generally a unanimous decision. C. The board of directors acts as a facilitator to convey interests of the stockholders to the management without any real authority. D. The functions of the board of directors are limited to ensuring the hiring and firing of CEOs.

A. Votes at shareholder meetings determine whose representatives are appointed to the board of directors.

Saul is a manager at Holden Apparels Inc. and is friends with the company's CEO. This privilege gives Saul the information that Holden Apparels is in the midst of talks to take over a leading rival. Saul buys stocks of Holden with the expectation that its stocks will appreciate. But the deal falls through and the stocks of Holden depreciate in the following months. Are Saul's actions unethical? Why? A. Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome. B. Yes, because it is illegal and unethical for Saul to possess any kind of insider information. C. No, because Saul did not ask the CEO to disclose such information to him. D. No, because Saul did not make any profits from trading stocks using this information.

A. Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome.

A firm that uses a structure that is organized along different business functions such as HR, R&D, Sales, and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure. A. global matrix B. multidivisional C. functional D. simple

A. global matrix

Adverse selection in a public stock company occurs when: A. information asymmetry increases the likelihood of selecting inferior alternatives. B. a firm's work tasks, incentives, and employment contracts minimize opportunism by agents. C. a principal is not aware of the context from which information from an agent is derived. D. an agent manipulates information to benefit stockholders.

A. information asymmetry increases the likelihood of selecting inferior alternatives.

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly developed economies. One way firms are grappling with this issue is by: A. introducing results-only-work-environments to tap intrinsic motivations. B. refining the budgeting process to encourage more department collaboration. C. updating standard operating procedures to allow more process flexibility. D. using output controls only when the goal is to ensure a predictable outcome.

A. introducing results-only-work-environments to tap intrinsic motivations.

Organizational culture can be the basis of a firm's competitive advantage if _____. A. it is valuable, rare, and difficult to imitate B. it is trademarked and copyright protected C. it converts the organization's core competency into its core rigidity D. it changes the organization's inertia into its core rigidity

A. it is valuable, rare, and difficult to imitate

While working a night job at a call center, Neville creates an app called FastServe, which can be used to place orders at restaurants, rate the restaurants, and make reservations. Because he receives good responses for his app, he quits his current job to focus his efforts on FastServe. He creates a startup called TYOP and hires three people to help him improve FastServe and maintain the servers that run it. In this scenario, TYOP most likely has a _____ structure. A. simple B. matrix C. mechanistic D. functional

A. simple

Organizational design is: A. the process of creating, implementing, and modifying the structure of an organization. B. primarily focused on replacing a firm's competitive advantage with competitive parity. C. a process that always functions independently of strategy formulation. D. primarily focused on formulating effective strategies, not implementing them.

A. the process of creating, implementing, and modifying the structure of an organization.

John Hammergren, the CEO of McKesson, received an annual compensation of $50 million. The compensation was closely tied to the performance of McKesson's stock, which appreciated considerably during his tenure. This situation best exemplifies _____. A. the strong relationship between executive compensation and company performance B. the public's perception of a company's stock value based on executive compensation figures C. the avoidance of control mechanisms to guide performance D. the inversely proportional relationship between CEO compensation and the pay of the average employee

A. the strong relationship between executive compensation and company performance

Which of the following is true of W.L. Gore & Associates, which has a lattice organizational form? A. It has a high degree of centralization. B. All employees are empowered to speak to all other employees in the organization. C. Its culture has been linked to lower employee satisfaction and retention. D. The degree to which a task is divided into separate jobs is high.

B. All employees are empowered to speak to all other employees in the organization.

Which of the following is an implication for the strategist in the context of corporate governance and a company's success? A. Very few and specific corporate governance mechanisms can be effective in addressing the principal-agent problem. B. Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage. C. Leading by ethical example often has a less strong effect on employee behavior than words. D. A firm that restricts its responsiveness to stockholders (and no other stakeholders) and keeps them committed to its vision will be successful.

B. Effective corporate governance and solid business ethics are critical to gaining and sustaining competitive advantage.

Flight Stream Inc., a toy manufacturing company, encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other. It allows its employees immense flexibility in charting their own career path within the organization. Chris has worked at Flight Stream for eight years but has never had a boss or supervised an employee. Which of the following is most likely true in this scenario? A. Flight Stream Inc. is a mechanistic organization. B. Flight Stream Inc. has a flat organizational structure. C. Flight Stream Inc. has a high degree of centralization. D. Flight Stream's organizational culture is governed by codified rules.

B. Flight Stream Inc. has a flat organizational structure.

Leila is a graduate student pursuing a course in international business. Presented with the case of HP's "soap opera," Leila wonders whether it was the right decision to ask the CEO of HP, Mark Hurd, to step down after he was accused of sexual harassment. Having a strong inclination toward Michael Porter's idea of value creation, Leila is most likely to conclude that: A. HP was wrong in asking Mark to step down because it did not consider the profit dip that would affect its shareholders. B. HP was right in asking Mark to step down because it has a greater obligation toward society. C. HP was wrong in asking Mark Hurd to step down because he was responsible for an almost 90 percent appreciation of the company's stock. D. HP was right in asking Mark Hurd to step down because agents, unlike principals, are disposable.

B. HP was right in asking Mark to step down because it has a greater obligation toward society.

Which of the following statements is true of organizational culture? A. Changes in culture are too frequent to have any impact on strategic implementation. B. It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages. C. It is always better to focus on output control and performance than on organizational culture. D. According to research, more than 50 percent of firms change culture successfully.

B. It is better for founder CEOs to create a relevant culture, structure, and strategy in the early stages.

Mario founded Tapoz Communications Inc. in 1993. Ten years later, the company went public. Despite Mario's death in 2005, the company reported a 75 percent increase in revenue in 2006. Which of the following characteristics of a publicly traded company does this scenario best exemplify? A. Transferability of investor ownership B. Legal personality C. Limited liability for investors D. Separation of legal ownership and management control

B. Legal personality

According to Michael Porter, which of the following is a problem with many publicly traded companies? A. Shareholders of publicly traded companies do not have a legitimate claim on profits. B. Many publicly traded companies have defined value creation too narrowly in terms of financial performance. C. There is no transferability of stock ownership in publicly traded companies. D. The legal owners of publicly traded companies also make management decisions for the company.

B. Many publicly traded companies have defined value creation too narrowly in terms of financial performance.

Why does strategy implementation often require changes within an organization? A. Strategy implementation is less important than strategy formulation. B. Strategy implementation transforms strategy into actions and business models. C. Strategy always follows structure. D. Strategy implementation does not affect resource allocation and power distribution within an organization.

B. Strategy implementation transforms strategy into actions and business models.

Which of the following is the source of the principal-agent problem in publicly traded companies? A. The law of legal personality B. The separation of ownership and control C. Limited liability for investors D. Transferability of investor ownership

B. The separation of ownership and control

Which of the following statements is true of shareholders in a public stock company? A. They directly supervise and coordinate the manufacture of products and delivery of services. B. They are granted a charter of incorporation by the state and legally own company stock. C. They are the centerpiece of corporate governance. D. They are appointed by a board of directors to oversee the company's management.

B. They are granted a charter of incorporation by the state and legally own company stock.

W.L. Gore has four product divisions: electronic products, industrial products, medical products, and fabrics division. It also has manufacturing facilities in U.S., China, Germany, Japan, and Scotland, and business activities in 30 countries across the globe. Based on this information, which of the following statements is most accurate? A. W.L. Gore is pursuing a cost-leadership strategy. B. W.L. Gore is using a multidivisional structure. C. W.L. Gore is using a simple structure. D. W.L. Gore is pursuing an integration strategy.

B. W.L. Gore is using a multidivisional structure.

Johan is a recent graduate who states that he has interned at a major accounting firm so that his value as a candidate for employment increases. A startup recruits Johan based on his stated credentials without verifying them. Two days into the job, Johan's team lead realizes that Johan does not know much of what he claimed to know during the interview. This scenario best exemplifies _____. A. moral hazard B. adverse selection C. shared value creation D. corporate governance

B. adverse selection

Elc Inc. is an electronic appliances manufacturer that has many strategic business units (SBUs), among which, Television and Computers share a close relationship. These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units. However, they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs. Such a relationship between SBUs in a business is referred to as _____. A. competition B. co-opetition C. exploitation D. exploration

B. co-opetition

One of the ways to foster ethical behavior in employees is to: A. avoid codifying organizational culture. B. create a control system that encourages desired values. C. view clients as counter parties to transactions. D. align the vision statement of the organization with its informal culture.

B. create a control system that encourages desired values.

A functional structure is recommended when a firm: A. has a broad focus in terms of its product/service offerings. B. has a low level of diversification. C. has a low degree of specialization. D. diversifies into different product lines and geographies.

B. has a low level of diversification.

Curve Inc. is a software development firm based in California. It strives to provide highly differentiated software at cheaper prices when compared to its competitors. Which of the following organizational designs should Curve Inc. implement to ensure the maximum success of its business strategies? A. Organic B. Simple C. Ambidextrous D. Mechanistic

C. Ambidextrous

Which of the following is an advantage offered by a functional structure? A. It allows for an efficient top-down communication chain and thus relies on a relatively tall structure. B. It facilitates a lower division of labor, which is linked to higher productivity. C. It allows for a higher degree of specialization and deeper domain expertise. D. It facilitates a lower level of specialization.

C. It allows for a higher degree of specialization and deeper domain expertise.

Which of the following best supports the fact that Goldman Sachs was unethical in the Abacus deal? A. It was given a "triple A" rating for Abacus. B. It made no effort to ascertain the stability of the real estate market. C. It knew that Paulson had bundled high-risk mortgages into the collateralized debt obligation. D. It lost $100 million in the Abacus fiasco.

C. It knew that Paulson had bundled high-risk mortgages into the collateralized debt obligation.

What was one of the reasons for Jerry Yang's failure at Yahoo? A. Jerry made many necessary changes to the company's organizational structure. B. Jerry established a successful organizational structure and culture, but could not assert control. C. Jerry's preference for obtaining consensus among his managers led to bickering and infighting. D. Jerry focused most strategic changes on improving user experience and increasing advertising revenues.

C. Jerry's preference for obtaining consensus among his managers led to bickering and infighting.

Which of the following is a characteristic of a public stock company? A. Shareholders who provide risk capital are liable for all losses incurred by the company. B. Investor ownership cannot be transferred easily between investors. C. Legal personality allows a firm's continuation beyond the founder or the founder's family. D. In publicly traded companies, professional managers are the legal owners of the company.

C. Legal personality allows a firm's continuation beyond the founder or the founder's family.

Which of the following statements best supports the separation of ownership and control in publicly traded companies? A. Shareholders are liable only for the capital they invest and not for their personal wealth. B. Shareholders can freely trade the company stocks. C. Shareholders own stocks but do not run the company. D. Managers control the company but may also have stock ownership.

C. Shareholders own stocks but do not run the company.

Which of the following is a major issue at the forefront of CEO compensation in recent years? A. A comparison of the performance of the organization before and after the CEO's tenure B. The performance of the CEO as an employee versus the performance as a board member C. The absolute size of the CEO pay package compared with the pay of the average employee D. A comparison of the compensation of senior management hired during and before the CEO's tenure

C. The absolute size of the CEO pay package compared with the pay of the average employee

Hashim is a board member at Kluster Motors Inc. He is also a senior executive of the firm. On the other hand, the board is chaired by Compton Smith, the CEO of Jensen Electronics. According to this scenario, Hashim _____. A. cannot serve on the board of any other organization B. is more likely than Compton to take care of stockholder interests C. is an inside director of Kluster Motors D. can use information from board meetings to trade stocks of Kluster Motors

C. is an inside director of Kluster Motors

When a firm diversifies into different product lines and geographies, a _____ structure is preferred. A. simple B. functional C. multidivisional D. network

C. multidivisional

Which of the following statements best describes groupthink? A. It is a process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure. B. It is a situation in which organizations compete with one another for resources, but they also need to cooperate to share competencies. C. It is a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations. D. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.

D. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.

Which of the following statements is true of strategy in an organization? A. Strategy implementation is considered unsuccessful if it requires changes within an organization. B. To implement a strategy successfully, an organization's structure must be rigid. C. Strategy implementation does not affect resource allocation and power distribution within an organization. D. Organizational structure must follow strategy in order for firms to achieve superior performance.

D. Organizational structure must follow strategy in order for firms to achieve superior performance

and upgrading as the firm and the environment change? A. The firm's original core competency can turn from a liability into an asset. B. The firm's organizational inertia can turn into its core rigidity. C. The firm's competitive parity can turn into its competitive advantage. D. The firm's culture can turn from a core competency into a core rigidity.

D. The firm's culture can turn from a core competency into a core rigidity.

How does W.L. Gore exemplify founder imprinting? A. Gore consistently ranks among the top 25 of Fortune's "100 Best Companies to Work For" list. B. W. L. Gore & Associates is organized in a formal and centralized manner. C. The compensation of Gore associates is decided through a peer review system. D. The four core values articulated by Bill Gore guide the company and its associates to this day.

D. The four core values articulated by Bill Gore guide the company and its associates to this day.

Neville and Andre are customer care employees at JPN Care. In between calls, Neville and Andre spend time on Facebook and YouTube. The relaxed guidelines at JPN allow them to do that. However, sometimes, they knowingly avoid answering calls or keep customers on hold, while they check their social networking accounts. Such behavior: A. is neither unlawful nor unethical; hence, Neville and Andre cannot be reprimanded. B. typically exemplifies the agency problem of adverse selection. C. goes against the principles of shareholder capitalism. D. can be stopped by implementing performance incentives and strict control mechanisms.

D. can be stopped by implementing performance incentives and strict control mechanisms.

Clare, the CEO of Femica Inc., reports to the board of directors appointed by the shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n) _____. A. shareholder capitalism scenario B. inside director-outside director conflict C. fiduciary responsibility oversight D. principal-agent problem

D. principal-agent problem

Grameen Bank in Bangladesh was founded to provide microcredit to impoverished farmers who wanted to start their own entrepreneurial ventures that would help themselves climb out of poverty. This best exemplifies Michael Porter's suggestion that: A. managers need to keep economic needs and societal needs disconnected from each other. B. a firm should expand its internal value chain to include nontraditional partners. C. businesses should focus on creating regional clusters such as Silicon Valley in the U.S. D. the largest but poorest socioeconomic group can yield significant business opportunities.

D. the largest but poorest socioeconomic group can yield significant business opportunities.

_____ is illustrated by a situation in which the principal cannot determine the value created by individual members of a team. A. Adverse selection B. Moral Hazard C. Information asymmetry D. Shareholder capitalism

A. Adverse selection

W. L. Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics, Glide dental floss, and Elixir guitar strings. Which of the following would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity? A. An extremely formalized organizational structure B. A highly organic organizational structure C. A low degree of centralization D. A flat organization structure

A. An extremely formalized organizational structure

To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate? A. How an organization accommodates strategy implementation through a flexible organizational structure B. How strategy implementation has an effect on resource allocation and power distribution C. How an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure D. How an organization optimizes its organizational structure to the current situation

A. How an organization accommodates strategy implementation through a flexible organizational structure

Why is it difficult to imitate the organizational culture of firms like Southwest Airlines and Zappos? A. Their culture reflects complex relationships with their employees, customers, and suppliers. B. They produce products that cannot be copied easily because of their complex designs. C. The employees in the organization themselves are unaware of the factors contributing to their organizational culture. D. It is not commercially viable for other companies to implement the same culture.

A. Their culture reflects complex relationships with their employees, customers, and suppliers.

Which of the following did management at Zappos do to reduce the level of formalization in their organization? A. They avoided asking their customer service reps in call centers to follow a detailed script. B. They increased their reliance on drop-shipment orders. C. They established top-down management as their primary strategy. D. They put an end to the practice that enabled employees to horizontally rotate to different jobs once they had mastered a particular job.

A. They avoided asking their customer service reps in call centers to follow a detailed script.

According to the agency theory, _____. A. conflicts that arise in corporations should be addressed in the legal realm B. corporations are more than a set of contracts between parties C. companies should focus on generating profits for stockholders D. principals and agents have interchangeable roles

A. conflicts that arise in corporations should be addressed in the legal realm

The root cause of the principal-agent problem between senior executives and lower-level employees can be explained by the: A. informational advantage of the lower-level employees. B. higher number of lower-level employees than senior executives. C. knowledge of employees regarding day-to-day tasks. D. operational expertise of lower-level employees in concentrated areas of a particular field.

A. informational advantage of the lower-level employees.

Zappos established its unique organizational culture: A. through explicitly stated values that are connected to its reward system. B. through input control systems that mandated adherence to organizational values. C. by closely monitoring employees calls with customers. D. by giving employees gift cards to shop at Zappos and Amazon.

A. through explicitly stated values that are connected to its reward system.

What is the result of managers' pursuit of strategies that define value creation too narrowly in public stock companies? A. It gives the managers greater control of the performance of the organization in the long term. B. It reduces the trust of shareholders in the organization as a vehicle for value creation. C. It helps companies increase firm profits by creating shared value. D. It enables companies to create social value by addressing society's needs but prevents them from creating economic value for shareholders.

B. It reduces the trust of shareholders in the organization as a vehicle for value creation.

Which of the following real-world scenarios best exemplifies formalization? A. Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts B. McDonald's use of standard operating procedures across the world C. W.L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses D. Yahoo's decision to fire its CEO after incurring huge losses

B. McDonald's use of standard operating procedures across the world

If the board of directors at GE decides to pursue a stakeholder strategy, should they change the ecomagination strategy? A. Yes, they should change the strategy because it provides benefits to the society. B. No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues. C. No, they should not change the strategy because the change would necessitate making tough ethical decisions. D. Yes, they should change the strategy because creating value for society is against the principles of stakeholder strategy.

B. No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues.

What does "limited liability for investors" imply in a public stock company? A. Shareholders are liable for their invested capital and personal wealth and not for any other investments made. B. Shareholders who provide the risk capital are liable only to the capital specifically invested. C. Shareholders are liable for all the decisions made by the board of directors of the company. D. Shareholders have financial but not legal responsibilities toward the public stock company.

B. Shareholders who provide the risk capital are liable only to the capital specifically invested.

At Opnic Corp., a cross-functional team is formed to work on a project for a new client. The team consists of Darius and four other members. At most of the team's presentations to senior management, Darius takes the lead and discusses project specifics with the management, while others chip in with additional information. At the completion of the project, Darius is recommended for promotion, while the other team members receive little recognition for their hard work. The reality is that Darius did very little actual work but spent some time compiling the project report based on different documents submitted by the others. This scenario at Opnic Corp. is a typical consequence of _____. A. moral hazard B. adverse selection C. shared value creation D. corporate governance

B. adverse selection

Coda Inc. is an apparel manufacturer. The management at Coda prefers moderate control over the operations of the different departments such as R&D, design, marketing, and sales. It allocates a budget to each function at the beginning of each quarter. This is an example of implementing control through _____. A. output controls B. input controls C. multidivisional strategy D. centralization

B. input controls

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's: A. is organic in nature. B. is mechanistic in nature. C. has an informal structure. D. has a decentralized structure.

B. is mechanistic in nature.

Organizational culture can help a firm gain and sustain competitive advantage only if the culture makes a positive contribution to the firm's economic value creation and _____. A. eventually gives way to core rigidity B. obeys the VRIO principles C. does not demonstrate causal ambiguity D. displays an absence of social complexity

B. obeys the VRIO principles

Travis, the CEO of Riplon Corp., used company funds to buy a car worth $1 million and a house for $6 million in Santa Fe. This is an example of _____. A. corporate governance B. on-the-job consumption C. adverse selection D. shared value creation

B. on-the-job consumption

Frank is a board member at Lofloy Greens Inc., a publicly traded company. In addition to his duties on the board, Frank is also a full-time employee as a senior manager at Spinson Locomotives Inc. Which of the following is most likely to be true of Frank? A. Frank is a part-time employee at Lofloy Greens. B. Frank cannot serve as a director on Spinson Locomotives' board. C. Frank is an outside director on Lofloy's board of directors. D. Frank is a stockholder of Lofloy Greens.

C. Frank is an outside director on Lofloy's board of directors.

Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job? A. It is confident that employees will be impressed with the company's creativity and will stay on for a longer term. B. It does not believe that a firm's culture can flow from its values when they are linked to the company's reward system. C. It believes that individuals who choose to stay on will fit in with the Zappos culture. D. It is certain that a firm's culture flows only from founder imprinting.

C. It believes that individuals who choose to stay on will fit in with the Zappos culture.

Which of the following is a disadvantage of a functional strategy? A. It frequently lacks the tools required to pursue a cost-leadership strategy. B. It does not facilitate rich communication between members of the same department. C. It cannot effectively address a higher level of diversification. D. It does not allow organizations to be flexible or innovative.

C. It cannot effectively address a higher level of diversification.

Which of the following functions did HP's board of directors fail at following the unexpected departure of Mark Hurd? A. Providing guidance to the CEO in the selection and compensation of other executives B. Evaluating and compensating the CEO C. Overseeing the company's CEO succession plan D. Appointing a new CEO

C. Overseeing the company's CEO succession plan

Which of the following is an unintended side-effect of a high degree of specialization in an organization? A. Decreased trade-off between breadth and depth of knowledge B. Decreased opportunities for the division of labor C. Reduced employee satisfaction due to repetition of tasks D. Reduced productivity

C. Reduced employee satisfaction due to repetition of tasks

Jamiro Inc. is a public stock company. Which of the following statements about the company best illustrates the fact that its investors have limited liability? A. Employees of Jamiro are legally permitted to invest their capital in the company's stock. B. Employees of Jamiro are also the owners of the company. C. Shareholders of Jamiro are responsible to the company only for the capital they have invested. D. Shareholders of Jamiro are not permitted to trade their company stock at the New York Stock Exchange (NYSE).

C. Shareholders of Jamiro are responsible to the company only for the capital they have invested.

Why are controls like budgets and operating procedures that McDonald's implements known as input controls? A. They are independent of an organization's culture. B. They are implemented by corporate headquarters. C. They are considered before employees make any decisions. D. They are ad-hoc and not codified.

C. They are considered before employees make any decisions.

Which of the following best explains why a board of directors may grant stock options as part of a compensation package? A. To reduce the transferability of stocks between stockholders B. To bring about a separation of CEO/chair duality C. To align incentives between shareholders and management D. To change the liability of shareholders from limited to unlimited

C. To align incentives between shareholders and management

The informational advantage that agents possess over principals is often based on the fact that: A. the information is extremely secure and protected from exposure to anyone outside the company. B. public stock companies are characterized by information symmetry. C. insiders are the first to learn about important developments before the information is released to the public. D. agents are legally permitted to freely trade the information in exchange for benefits, unlike principals.

C. insiders are the first to learn about important developments before the information is released to the public.

Black Mouse Inc., a web development firm, is headed by Rob Dennis, the CEO. Each functional department of the company—marketing, finance, and HR—has a president who reports to the CEO directly. Each department has various managers who manage teams. The managers report to the presidents and the team leads report to the managers. Finally, the employees at the lowest level report to their team leads. It is rare for a lower-level employee to interact with the CEO of the company. In this scenario, Black Mouse Inc. can be said to have a(n): A. organic organizational structure. B. decentralized organizational structure. C. tall hierarchical structure. D. flat hierarchical structure.

C. tall hierarchical structure.

GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars, produce higher quality, and create innovative designs best exemplifies _____. A. decentralization B. founder imprinting C. groupthink D. core rigidity

D. core rigidity

Postrupe Inc., a publicly traded company, has ten members on its board. Of the ten members, six members are employees of the company and includes the CEO, who also chairs the board. The board has been failing in its responsibilities toward the shareholders who now want a new board. Assuming that the total number of board members remains constant, how many outside directors should the shareholders appoint to Postrupe's board to achieve board independence? A. 1 B. 3 C. 5 D. 7

D. 7

Which of the following is NOT true of corporate governance in public stock companies? A. Corporate governance seeks to benefit multiple stakeholders, not just shareholders. B. Corporate governance provides rules for making decisions on corporate affairs. C. Corporate governance attempts to address the principal-agent problem. D. Corporate governance seeks to create a separation between ownership and control.

D. Corporate governance seeks to create a separation between ownership and control.

Which of the following is a feature of an organic organization? A. High degree of specialization B. Rigid division of labor C. Clear lines of authority D. High span of control

D. High span of control

Hoptin Inc. is a public stock company. Which of the following best exemplifies the legal personality of the company? A. Rosa can legally sell shares of Hoptin in the stock market. B. John is a shareholder of Hoptin but does not have any managerial duties. C. Kevin, an employee at Hoptin, is not responsible for any losses that Hoptin incurs. D. Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.

D. Jessi Hoptin, the company's founder, died a few years ago, yet the company is doing well.

Remote Inc. is a notebook manufacturing company based in Ohio. Remote's main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Remote Inc. likely to use if it has functional setup? A. Organic B. Simple C. Matrix D. Mechanistic

D. Mechanistic

Which of the following acts in the Goldman Sachs-Galleon Group insider trading scandal is an egregious exploitation of information asymmetry? A. Galleon Group's decision to trust Rajat Gupta's information as accurate B. Rajaratnam receiving information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs C. Warren Buffet's decision to inject a huge amount of money into Goldman Sachs based on its financial reports D. Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs

D. Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs

Which of the following statements best supports the view that GE's ecomagination strategy is in line with the Shared Value creation framework? A. The ecomagination strategy is the brainchild of the founder of the company. B. The ecomagination strategy helps GE spend more on research and development than other similar companies. C. The ecomagination strategy generated $3 billion in revenues for GE during 2012. D. The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage.

D. The ecomagination strategy allows GE to produce "green" products while increasing revenue and competitive advantage.

What are poison pills? A. They are used by shareholders to prevent the founder of a company from taking the company private through a leveraged buyout. B. They are unspecified conditions in the contract between stakeholders in an organization. C. They are used by companies in a bid to perform a hostile takeover of competing firms. D. They are defensive provisions that kick in should a buyer reach a certain level of share ownership.

D. They are defensive provisions that kick in should a buyer reach a certain level of share ownership.

Which of the following is NOT true about the members of the board of directors in a public stock company? A. They represent the shareholders' interests. B. They may hire and fire top management. C. They oversee the firm's operations. D. They are not responsible to shareholders.

D. They are not responsible to shareholders

Which of the following statements about W.L. Gore & Associates best supports the fact that it is organized in an informal and decentralized manner? A. W.L. Gore & Associates' employees are organized by their seniors into teams that are led by sponsors, not bosses. B. W.L. Gore & Associates prefers e-mail communication to face-to-face communication. C. W.L. Gore & Associates is characterized by a vertical organizational form. D. W.L. Gore & Associates refers to its employees as associates rather than employees.

D. W.L. Gore & Associates refers to its employees as associates rather than employees.

A typical college of business (or school of management) has several areas such as management, marketing, finance, accounting, MIS, and so on. This is an example of a(n) _____ structure. A. simple B. M-form C. matrix D. functional

D. functional

Serena is the CEO of Pedalo Inc., a publicly traded company. The shareholders want Serena on the board of directors despite her recent appointment as the CEO. This decision of the shareholders is most likely because Serena: A. is a board member of a major client. B. is more likely than other board members to take care of the stockholders. C. is also the CEO of other companies. D. is likely to provide the board with valuable inside information.

D. is likely to provide the board with valuable inside information.

Rajat Gupta's role in providing inside information to Galleon Group for the benefit of Galleon Group's stockholders and Rajat Gupta himself is an example of _____. A. shareholder capitalism B. adverse selection C. shared value creation D. moral hazard

D. moral hazard

A company that is using extrinsic motivation as an output control mechanism will most likely: A. organize training sessions for employees. B. cut budgets during recessions. C. implement a peer review system. D. threaten to lay off employees if they do not achieve targets.

D. threaten to lay off employees if they do not achieve targets.

Fast Call Inc. is a pharmaceutical company that has many breakthroughs in medicine to its credit. Unlike many other pharmaceutical companies, Fast Call has a relaxed work environment where employees are free to discuss projects with each other. Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy. Because of the company's work culture, its employees feel motivated to work harder and display more entrepreneurial behaviors. In this scenario, Fast Call Inc. is most likely an organization that is _____. A. formalized B. mechanistic C. centralized D. organic

D. organic

The conflict in a principal-agent relationship arises when: A. the company has more outside directors than inside directors. B. the strategy adopted by the company's agents tries to emulate the mission statement created by the principals. C. stockholders and agents are involved in the day-to-day operations of the company. D. the goals of the principals and agents are not aligned with each other.

D. the goals of the principals and agents are not aligned with each other.

Why does Michael Porter recommend expanding the customer base of an organization in terms of the Shared Value creation framework? A. Doing so could yield significant business opportunities that could improve the standard of living of the poor. B. Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization. C. Doing so could be the only way to meet stockholder expectations in a highly competitive market. D. Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.

A. Doing so could yield significant business opportunities that could improve the standard of living of the poor.

The board of directors of a public stock company consists of: A. managers appointed by the owners of a company to run its day-to-day operations. B. individuals who formally represent the firm's shareholders and oversee the work of executives. C. the legal owners of a publicly traded company that was purchased in a leveraged buyout. D. employees of a company who belong to the senior management and directly report to the CEO of the firm.

B. individuals who formally represent the firm's shareholders and oversee the work of executives.

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? A. It allows the firm to create incentives to foster process innovation in order to drive down cost. B. It allows the firm to reduce its cost below that of competitors while offering acceptable value. C. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing. D. It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.

C. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.

Ramadin is the CEO of Brownback Consulting Inc. Ramadin's efforts to persuade the board of directors to pursue a new business strategy fail. He borrows money from different sources and purchases all the outstanding shares of Brownback Consulting. What does this scenario best exemplify? A. Buy back B. Merger C. Leveraged buyout D. Initial public offering

C. Leveraged buyout

Frappe operates as a strategic business unit (SBU) under More or Less Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that: A. Frappe does not have its own profit-and-loss responsibility. B. Frappe is dependent on the other SBUs in More or Less Inc. C. Frappe has a matrix organizational structure. D. Frappe is led by its own CEO (or equivalent general manager).

D. Frappe is led by its own CEO (or equivalent general manager).

Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization? A. It frequently ranks among the top 500 companies to work for. B. Its communication lines are bottom-up and well defined. C. Its decision power is spread across the organization. D. Its job descriptions are very descriptive.

D. Its job descriptions are very descriptive.

Gannett Company integrated certain important functions of USA Today.com with USA Today, while keeping other functions independent. To support this integration, the president of USA Today shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance. This scenario best exemplifies a(n) _____. A. multidivisional structure B. organic organization C. simple structure D. ambidextrous organization

D. ambidextrous organization